C2005/4449, Transcript of Proceedings [2005] AIRCTrans 1929 (19 September 2005)

TRANSCRIPT OF PROCEEDINGS

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Workplace Relations Act 1996 12728-1

SENIOR DEPUTY PRESIDENT ACTON

C2005/4449

NATIONAL UNION OF WORKERS
AND
COLEVIC PTY LTD TRADING AS KEMALEX PLASTICS
s.170LW - Application for settlement of dispute (certification of agreement)
(C2005/4449)

MELBOURNE

11.04AM, MONDAY, 05 SEPTEMBER 2005

PN1

MS S ALLISON: I appear on behalf of the National Union of Workers with
MR J GLOVER.

PN2

MS T CIRKOVIC: I seek leave to appear for Kemalex.

PN3

THE SENIOR DEPUTY PRESIDENT: Is there any objection to the application for leave to appear?

PN4

MS ALLISON: No objection, your Honour.

PN5

THE SENIOR DEPUTY PRESIDENT: Leave is granted. Ms Allison.

PN6

MS ALLISON: Thanks, your Honour. This dispute relates to the application of redundancy provisions in the Kemalex NUW certified agreement 2005 to 2007. You will recall the agreement was certified on 9 August 2005. Do you have a copy of the agreement with you?

PN7

THE SENIOR DEPUTY PRESIDENT: I do.

PN8

MS ALLISON: Your Honour, I was also going to check if you had a copy of the deed of settlement that was handed up on that day.

PN9

THE SENIOR DEPUTY PRESIDENT: I don't think I've got that.

PN10

MS ALLISON: It's probably not material for the dispute. It does contain provisions relating to but is probably not material for the dispute today. Your Honour will recall that the agreement was reached after an extended period of industrial action. Immediately following the industrial action, the company announced its intention to make a number of positions redundant. There had been some discussion regarding that with the union prior to the finalisation of the enterprise agreement.

PN11

In particular, the company announced it intended to reduce the number of team leader-coordinator positions from six to three. The company selected for redundancy three employees, the union delegate, Pauline Bright, and two other active union members, Stipanija Ivkovic and Sanela Vikic. However, rather than pay the severance payments set out in the agreement the company notified employees that they would be moved to alternative employment.

PN12

The company notified employees that they would be demoted from the coordinator-team leader position to a level 2 machine operator position. The level 2 position is a very significant drop in pay for all employees. Your Honour, by way of example, Ms Pauline Bright's rate of pay will drop from 17.34 an hour to 14.68 an hour, that's $102.22 less a week or $5315.44 less per year. Stipanija Ivkovic stands to lose even more. She drops $139 a week or $7232 a year and Sanela Vikic drops $70.30 a week or $3655 a year.

PN13

THE SENIOR DEPUTY PRESIDENT: How much is the third one, sorry, per week?

PN14

MS ALLISON: Sorry, $70.30 per week. I note that all the employees are long serving employees so the drop in pay will also affect all entitlements including annual leave, sick leave and long service leave.

PN15

The demotion is also a significant drop in responsibility, skills and status. None of the employees agreed to the demotion and, in fact, on the union's advice, refused to sign documents demoting them. We submit that this demotion cannot constitute suitable alternative employment and in fact, the demotion is so significant it constitutes a repudiation of the employment contract.

PN16

Your Honour, there is a significant body of case law confirming that where employees' wages are reduced unilaterally by the employer, this constitutes a repudiation of the employment contract but for the purposes of today I merely make reference to this.

PN17

We submit that the positions are redundant and as the company cannot provide suitable alternative employment, the employees are entitled to severance pay. If I can take you to the agreement, clause 19 deals with redundancy. At 19.2 there is a transfer to lower paid duties clause which is straight out of the award. The company seeks to rely on this clause. We say the transfer to lower duties clause must be understood and, in fact, historically has been understood in the context of acceptable alternative employment.

PN18

You will see at clause 19.5 the alternative employment clause which is also a reproduction of the award clause that makes clear that, unless there is acceptable alternative employment, redundancy must be paid. It would be nonsensical if the employer could escape obligations under severance pay provisions and obligations to find acceptable alternative employment by unilaterally deciding to drop an employee's wages by a significant amount.

PN19

We further say that the transfer to lower duties clause only operates when an employment contract remains intact, in other words, where a demotion is of such a degree that, all things considered, the demotion does not constitute the termination of employment. We say that in the current circumstances the demotion is of such a degree that it repudiates the employment contract.

PN20

Your Honour, the case of AMWU v McIntyre Steel Industries deals with this issue. I'm in your hands as to whether I should proceed to go through that case at this moment for the purposes of today, if it would be of assistance.

PN21

THE SENIOR DEPUTY PRESIDENT: Yes, well, give it to us.

PN22

MS ALLISON: Your Honour, in this case the company sought to rely on the transfer to lower duties clause to demote three supervisors. If I can take you to paragraph 27 where Commissioner Hingley quotes Commissioner Whelan in Herman v Qantas Airways. She states:

PN23

The employment relationship is one in which there exists a common law contract of employment ...(reads)... or a variation of the original contract.

PN24

At paragraph 28 Commissioner Hingley notes that:

PN25

Not every demotion may be categorised as a termination of employment within the meaning of the Act.

PN26

However, Commissioner Hingley then goes on to find at paragraphs 38 and 39 that:

PN27

Because the demotions in this matter resulted in such a significant reduction in wages and duties, the employment contract had been terminated.

PN28

At paragraph 41 Commissioner Hingley states:

PN29

The award at clause 9.4.9 provides for transfer to lower paid duties in mitigation in redundancy...(reads)... suitable alternative employment.

PN30

At 42 states:

PN31

The respondent is at liberty to make application to the Commission to have the general severance pay prescription varied ...(reads)... cannot be objectively categorised as acceptable alternative employment.

PN32

Your Honour, we have had a number of discussions with the company regarding this matter and have not been able to resolve the issue. We submit that the employees are entitled to the redundancy payments in accordance with the agreement and the deed of settlement. We're happy to go into conference to try to resolve the matter.

PN33

THE SENIOR DEPUTY PRESIDENT: Are the employees working there?

PN34

MS ALLISON: Yes, they are, your Honour, and I believe they have been demoted at this point. Yes.

PN35

THE SENIOR DEPUTY PRESIDENT: When were they demoted, as you put it?

PN36

MR GLOVER: Your Honour, I think Pauline Bright would have been demoted approximately about four to five weeks ago. They have been staggered over the last four to five weeks because, as a result of the dispute that took place, there was a large number of people required to take annual leave and long service leave. They've been coming back at different stages but it has taken effect on the three people concerned.

PN37

THE SENIOR DEPUTY PRESIDENT: Thank you. Ms Cirkovic.

PN38

MS CIRKOVIC: Thank you, your Honour. I think at the outset I should say that it's probably not appropriate that I address the legal submissions that have been put by my friend in terms of categorising the situation as either a legal redundancy or not. If that's the path that we ultimately go down, then I would be asking the Commission for some dates, obviously the appropriate course, including arbitration.

PN39

What has taken place over the course of the last few weeks the union is well aware of and there have been some serious changes that have needed to be made as a result of the quite serious and protracted industrial dispute that took place out at the site.

PN40

In terms of the situation that we're dealing with now, your Honour would no doubt have copies of two letters that my firm sent to the union that I hope were Cc'd to your Honour. One is dated 31 August. That went to Martin Pakula of the NUW that was Cc'd to your Honour, I believe.

PN41

THE SENIOR DEPUTY PRESIDENT: I can recall seeing one of them, not two of them though, I must say and I must say neither of them are on the file. Have you got a copy?

PN42

MS CIRKOVIC: I've got copies of both and my friend would have a copy of the second one as well, I take it. If your Honour would bear with me for a moment.

PN43

THE SENIOR DEPUTY PRESIDENT: Yes, sure.

PN44

MS CIRKOVIC: Your Honour, a response was received to the first letter, that is 31 August 2005 letter, on 1 September 2005 from Mr Pakula. Does your Honour have a copy of that?

PN45

THE SENIOR DEPUTY PRESIDENT: No.

EXHIBIT #K1 LETTER FROM TANIA CIRKOVIC AND ASSOCIATES TO NUW DATED 31/08/2005

PN46

THE SENIOR DEPUTY PRESIDENT: I don't have the response. Have you got a copy of that?

PN47

MS CIRKOVIC: The response, I've got that as well, your Honour. I can hand that up.

EXHIBIT #K2 RESPONSE LETTER FROM NUW TO TANIA CIRKOVIC AND ASSOCIATES DATED 01/09/2005

PN48

MS CIRKOVIC: Then, your Honour, follows another letter from us, 2 September letter 2005. That might need to be marked as well.

EXHIBIT #K3 LETTER FROM TANIA CIRKOVIC AND ASSOCIATES TO NUW DATED 02/09/2005

PN49

MS CIRKOVIC: Both of those letters, your Honour, written by my firm and exhibits I think K1 and K3 as they have been marked, were written in an endeavour to clarify to the greatest extent possible the nature of the current situation, if I can refer to it in that way. It started, we had understood, as an issue involving one employee, Pauline Bright. It developed from there in the letter of 1 September from the union to a number of employees. The 2 September letter from us really attempted to kind of confine the issues and work out where things were at.

PN50

It appears from today's submission that we're dealing with three employees, Pauline Bright and two others whose surnames I was unable to recall, but I presume transcript has recorded those. Really, given the uncertainty that we on this side are dealing with in terms of the facts and given that the facts are really what's going to determine the legal position, I think perhaps the best course at this stage, if your Honour is amenable to that, is to take up the suggestion of my friend and go into conciliation.

PN51

THE SENIOR DEPUTY PRESIDENT: Are you content to do that, Ms Allison?

PN52

MS ALLISON: Happy with that, your Honour.

PN53

THE SENIOR DEPUTY PRESIDENT: I'll adjourn into conference.

<NO FURTHER PROCEEDINGS RECORDED

LIST OF WITNESSES, EXHIBITS AND MFIs

EXHIBIT #K1 LETTER FROM TANIA CIRKOVIC AND ASSOCIATES TO NUW DATED 31/08/2005 PN45
EXHIBIT #K2 RESPONSE LETTER FROM NUW TO TANIA CIRKOVIC AND ASSOCIATES DATED 01/09/2005 PN47
EXHIBIT #K3 LETTER FROM TANIA CIRKOVIC AND ASSOCIATES TO NUW DATED 02/09/2005 PN48